Is Wi-Fi a losing strategy?

As providers struggle with costs, cities and companies are backing out

Wi-Fi, once hyped as the technology that could provide wireless Internet access to personal and business computers across urban America, is in deep trouble here and around the country.

In many cities, Wi-Fi projects are dead or faltering, saddled with growing equipment expenses, reception problems and little interest by governments in pumping tax money into them.

Unreliable business plans of prospective Wi-Fi firms, mounting expenses and undependable technology have delayed some projects or led wireless providers to walk away from others. Some experts are advising local governments to drop their involvement with Wi-Fi and leave the venture of wireless Internet solely in the hands of private industry.

An announcement from EarthLink Inc. last week that it was cutting back on its Wi-Fi business led San Francisco, Houston and Chicago to back out of their deals with the firm.

Chicago officials also said they were dropping their plan to blanket the city with wireless broadband Internet service because it would be too costly and too few residents would use it.

Milwaukee's plans to build a citywide Wi-Fi system have run into repeated delays, and several deadlines have been missed.

Testing continues on the network's "demonstration area," on the city's near west side, but it could be several more weeks before that part of the network is available to the public, said Nik Ivancevic, a partner in Midwest Fiber Networks, which is building Milwaukee's $20 million Wi-Fi system at its own expense.

Trouble in Waukesha

In Waukesha, officials on Tuesday are expecting a report from Colorado Wi-Fi firm RITE Brain, which built and tested a trial transmission network on the city's north side. An early run uncovered enough problems to raise concerns about the project's viability there.

Hilly terrain, weak signal penetration and transmissions that bounce like radar signals off tree leaves are some of the technical problems experienced with Wi-Fi in Waukesha and elsewhere.

As Wi-Fi experiments in other cities progress, providers are saying they need public financing to continue work on the networks.

"The original cost estimates were low, but when the project dealt with issues of topography and the size of the city, the expenses increased," said Waukesha Ald. Joan Francoeur, who as chairwoman of that city's technology committee has watched the Wi-Fi experiment in her community since February of last year.

Even in communities where Wi-Fi has gained footholds - including Corpus Christi, Texas; Minneapolis; Philadelphia; and Portland, Ore. - Internet providers are talking about asking for more government money.

In Chicago, EarthLink Inc. wanted massive public financing for a Wi-Fi system, said city officials there.

Increasingly, major Internet companies won't even open Wi-Fi negotiations with a city unless the municipal government either invests in building the infrastructure or - as in Minneapolis and St. Louis - agrees to pay for using the network for a big chunk of city business, said Randy Gschwind, Milwaukee's chief information officer.

Milwaukee has done neither.

Wi-Fi companies originally expected to offer wireless Internet service at lower rates than conventional wired service, Gschwind said. But in the years since those plans were developed, wired service has become less expensive and faster than wireless, and it works better inside buildings, he said.

As a result, Midwest Fiber executives told Milwaukee aldermen July 18 that it was possible the company could walk away from the deal if it is not financially viable.

But the company is not at that point yet, said Midwest Fiber's Ivancevic. The company is committed to opening the network in the demonstration area and then taking some time to assess consumer reaction and demand before deciding whether to move forward with expanding the network citywide, he said.

Enlisting a partner

Midwest Fiber has found a major national partner to be the network's Internet service provider, but cannot disclose the other company's identity until the demonstration area is opened to the public, Ivancevic said.

Most of the Milwaukee antennas are mounted on We Energies utility poles. By contrast, the St. Louis Wi-Fi network has been delayed because antennas were mounted on streetlights, but engineers haven't figured out how to power the antennas when the lights are off, various media are reporting.

Charging the provider?

Waukesha could face the same dilemma over streetlights that automatically turn off and whether the city charges the wireless firm for the use of electricity, according to Don Shelley, a longtime ham radio operator and member of the committee exploring the Wi-Fi project in Waukesha by RITE Brain.

Shelley said some Wi-Fi firms are insisting that local governments become "anchor tenants" of the system, in the same sense that malls need anchor stores to attract customers and generate guaranteed revenue.

Neither Francoeur nor Shelley would comment about the future of Waukesha's RITE Brain project, but both agreed that Wi-Fi is likely to become an entrepreneurial venture, as opposed to one that strikes a partnership with governments.

Many homes and small businesses, such as coffee shops and taverns, run Wi-Fi for their customers.

Francoeur said the service likely would take hold if small groups of businesses come together to provide Wi-Fi in about a 10-square-block area.

Shelley said that if RITE Brain continued its work in Waukesha, it would be done at the firm's expense. City help would be limited to locating high spots to situate transmitters on light poles and traffic signals.

But that approach "is proving to be untenable in other places," said Milwaukee's Gschwind. "Companies don't believe any more they can make money with this business model."

The Associated Press contributed to this report.

About Larry Sandler

Larry Sandler has been writing about government, politics, transportation, business and education in Wisconsin and Illinois for more than 25 years. He joined the Milwaukee Sentinel's staff as a general assignment reporter in 1982, after covering county government, politics and business for The Pantagraph of Bloomington-Normal, Ill. At the Sentinel, he reported on higher education, the Milwaukee Public Schools, Milwaukee County government and the manufacturing and transportation industries. After the April 1995 merger of the Sentinel and the Milwaukee Journal, Sandler became the transportation reporter for the Milwaukee Journal Sentinel, and from May 2001 to May 2007, he also wrote the weekly Road Warrior column. His investigation into flaws in aviation security earned a first-place award in the Milwaukee Press Club’s 2004 Excellence in Wisconsin Journalism Contest. Sandler was named City Hall reporter in June 2007 and continues to cover public transit issues as well. He holds a bachelor’s degree in journalism from the University of Illinois at Champaign-Urbana and a master’s degree in public affairs reporting from the University of Illinois at Springfield.